Have you ever encountered a borrower who thinks they know more than you? They will call a mortgage consultant to help them with financing and they have the audacity to listen to someone who is not mortgage consultant and dictate what you need to do and what you are supposed to give them. Let me tell you my experience:
I have a client named Juanita (not her real name!). Who refinanced 2 years ago (when rates are at an all time low). Thier current rate is 5.55%, interest only 2 year ARM that is about to expire the following month. Thier ARM is about to go up to 8.55%. Thier new monthly payment will be $650 more. I got them a very good rate of 5.75% at par, but will still increase thier monthly payment since they have an interest only (no principal was paid for 2 years) plus adding the closing cost and cash out of $20,000. The rate went up as well. I charged her only a point. I told her an increase of $250 is better than $650. And now it is a 30 Year fixed not an adjustable. By the way she told me that she is no longer planning on refinancing in the future and she lived at her home for 21 years now. So a 30 year fixed is just what she needs.
She turned down the deal because her neighbor told her that she should get a lower monthly payment because todays rates are good (I wonder where he got that information) and that is what they got (the neighbor) when they refinanced 2 years ago. Are you kidding me? That was 2 years ago. They used to have a rate of 9.2% and got a new rate of 5.75% (her neighbor coming from a rate of 9.2% not 5.55%).It is almost impossible to even match her 5.5% without a loan discount (buy-down), and she does not have enough equity to pay down points. The LTV will change and the pricing will change drastically if I buy down the rate. I explained to her that there is no way of lowering her payment. I explained that her loan amount is bigger and the rate is higher. She did not listen to the math.
She rather listen to her neightbor (who works as a cafeteria lady), than a mortgage professional. I have closed thousands of mortgages in my career, how many closings did her neighbor have?
Anyway she decided to shop around and the next mortgage professional she dealt with aren't honest with her in the first place and promised her the moon. She spent money on appraisal and they come up with a rate and new payment worse than my offer. THe new mortgage guy also charged her more points. She walked out of the deal as soon the the new mortgage guy received a clear to close.
She called me a few mnoths later and told me that she want to use me again, After 4 months of waiting and shopping around she now have a 1 x 60 mortgage rate and her scores went down drastically. Now I could not even give her my original offer.
I tried to be honest and upfront the first time around, it just baffles me that inspite of the honesty society has been subjected to an environment of suspicions and mistrust. No matter how hard you try to protect your clients if they do not listen there is little you can do.
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I understand! For some reason some people think that we just need our handstamped at the door in order to work in the field!